Terms and Conditions: What to Review Before Signing an ILF Agreement
Introduction
The contract behind an ILF facility determines far more than the fee — it defines who qualifies, what happens if a customer doesn't pay, and what obligations the business is actually taking on. Reading it closely before signing avoids surprises later.
Why the Fine Print Matters
Two ILF offers with similar headline pricing can carry very different real-world obligations:
- Eligibility criteria determine which invoices and debtors the provider will actually finance — details that only become clear on close reading.
- Repayment terms, especially around recourse vs. non-recourse financing, decide who bears the loss if a debtor doesn't pay.
- Some agreements include exclusivity clauses, minimum volumes, or auto-renewal terms that extend well beyond financing a single invoice.
What to Check Before Signing
- Confirm whether financing is recourse (the business repays if the debtor doesn't) or non-recourse, and what triggers each case.
- Look for any minimum volume commitments, exclusivity requirements, or automatic renewal clauses beyond the invoice being financed.
- Understand exactly what happens — timeline, fees, consequences — if a customer pays late or disputes the invoice.
Getting Started
Have a clear list of questions ready before reviewing any agreement — recourse terms, eligibility rules, and exit/renewal conditions — and don't hesitate to have a contract reviewed professionally if the financing relationship is expected to be ongoing rather than one-off.